UN official John Holmes describes the situation in Gaza and the negative role played by the Israeli siege on the Gaza strip in a Haaretz article today. Holmes correctly makes the assessment that the siege encourages a smuggling economy and that it doesn't actually exert pressure on the citizens of Gaza because goods are generally available. What it does do, however, is force people to work for either the PA or...Hamas (to get enough money to pay for goods).
This is a classic counter-insurgency failure. By maintaining the siege, Israel is creating a social need which Hamas fills. This in turn creates a dependency on Hamas from Palestinians in Gaza which makes it hard to eliminate irreconcilable elements of Hamas. Israel's siege is cleaving the population and Hamas together rather than cleaving it apart. This is a serious strategic failure. In Iraq, the U.S. was able to cleave the population from insurgent groups by providing them with basic needs and security. Many people for whom the U.S. provided were suspicious, ambivalent, or even antagonistic to the U.S. However, the practical effect of this aid was to expose a critical rift between groups like al-Qaeda in Iraq and the Iraqi population. Targeting violent members of these groups became much easier because the population was a) not assisting them and b) providing intelligence.
So regardless of the moral implications one way or the other, the siege on Gaza is not likely to provide Israel with significant benefits and in reality is likely to harm the Israeli security posture in the long run.